On Russian sanctions: their volume and consequences of violating the sanctions regime

Russian and British lawyers made a prediction on the actions of the Public Chamber of the Russian Federation.

The Public Chamber has offered to introduce criminal liability for trading banned foodstuffs from the US and EU, the Izvestiya newspaper says. This step was expected and predicted. On 6 July 2015, the topic of sanctions and their influence on contracts and disputes was discussed in the Consulate General of Great Britain in the Urals at the seminar of the British and Russian law association.

Denis Puchkov, Managing Director of Puchkov&Partners, speaking on the topic “Overview of sanctions against Russia: their volume and consequences of violating the sanctions regime” gave a legal assessment to the sanctions in question. In particular, he stated that sanctions exchanged by the parties of the so-called conflict cannot be considered symmetrical due to their absolute difference. Western sanctions have a more ‘personal’ character since they are aimed at certain people who are not allowed to enter their territories and their accounts as well as their assets on the territory of the US, European Union, Canada, and Australia have been ‘frozen’. Besides, western companies are not to conduct business with some Russian companies, with the list of prohibited actions being made. In case the sanctions regime is violated, there is criminal liability in the form of 18-month imprisonment.

Russian sanctions, in the view of Denis Puchkov, have a more general character, because the sanctions list includes the Russian favorites like cheese, meat, fish, dairy products, fruits and vegetables. In case the sanctions regime is violated, there is only administrative liability in the form of a fine. Besides, to regulate state procurements, the government took the decision to limit the purchase of goods for the consumer industry and for municipal and state needs; the list includes fur clothes, fur, leather, suitcases, bags, etc.

“Recently we have seen judicial precedents on the refusal to satisfy the claims on recognizing the sale of goods included into the sanctions lists illegal, because there is no legislative ban of this kind. In fact, such a legislative ban extends to the import and does not extend to any other actions. The legislator should fill this gap in the near future because it is aimed at sanctions to exclude the goods in the list”, the advocate says.

Summarizing, Denis Puchkov notes that the statistic data of the RF GosKomStat (State Statistics Committee of the Russian Federation) demonstrates a stable and considerable increase of both consumer prices and agricultural goods prices. At the same time in European countries, goods have become cheaper due to the surplus of goods and real support of this sector of economy by the state.

“In 2015, this sector did not see any considerable changes except for the prolongation of sanctions. Thus, the West has prolonged sanctions for another six months, while the Russian Federation has done it for a year, i.e. till 5 August 2016. We think the sanctions will further be extended, and such questions as application of force majeure and circumvention of law to the previously arisen international relations will be the most interesting issues in the legal and business sphere”, concluded Denis Puchkov.

Kate Kostromina